Beer tax increase proposed, opposed

MANCHESTER - The state's beer industry is vowing to fight a proposed 33 percent increase in the wholesale beer tax.

Two lawmakers have filed a bill, HB-168, that would boost the state's tax on a gallon of beer from 30 cents to 40 cents and spend the extra dime per gallon on alcohol and drug abuse prevention programs.

Rep. Charles Weed, D-Keene, cosponsored the bill that would increase the tax.

"Government serves a necessary service that isn't provided by the private sector," Weed said. "Revenue-starved government is not capable of doing what needs to be done."

Weed calls "irresponsible," the philosophy of the state relying on "excise taxes at the expense of not addressing the health consequences" of the products taxed.

He has also filed bills to change the constitution to allow a progressive state income tax, a proposal he concedes has no chance of becoming law.

The beer tax is paid at the wholesale level. Chris Brown is owner and president of New Hampshire Beer Distributors, Inc., the state's biggest beer distributor.

He said the additional cost will be pushed down the line.

"This is a really regressive tax; if you're looking to increase taxes on lower income and middle America, a beer tax is right there," Brown said.

Beer sales in New Hampshire are nearly 43 million gallons per year, according to state figures.

Statisticians say at 32.2 gallons per person every year, New Hampshire has the highest beer sales per capita in the country. But a lot of the New Hampshire-sold brew goes over the border to Vermont, Maine and Massachusetts, which each have bottle deposit laws and higher taxes.

The alcohol abuse prevention and treatment fund that would receive funds from the higher beer tax is run by the Governor's Commission on Alcohol and Drug Abuse Prevention, Intervention and Treatment.

The fund is already supposed to get 5 percent of the profits from the state liquor stores. But Commission Chairman Tim Rourke said the fund never gets all the promised liquor profits because lawmakers pass superseding legislation that diverts the money to the general fund.

If it isn't diverted, the higher beer tax would mean an additional $4,295,108 for that fund, according to a fiscal note developed by state agencies.

Craft breweries

Beer distributors claim that their industry is already heavily taxed, and an additional tax will be tough for the industry's newest - and fastest-growing - players, the craft breweries that have popped up in the state, at least seven in the past two years.

"The issue is greater than a dime per gallon on beer sold," said Scott Schaier, a lobbyist for the beer wholesalers trade association. "The brewing industry is a bright spot and to throw water on the sparks is not the right move."

Henniker Brewing Co. bottled its first 40 cases of beer Monday.

The fledgling company's owner, David Currier, said he has made a significant investment in his brewery.

The company built a state-of-the-art brewery and hired brewmasters who spent months developing the recipe.

"It's obviously a cloud over a brand-new industry like ours," Currier said. "We've been trying to price our beer in the market and Joe Sixpack will have to pay the tax; it'll be a pass through."

The beer industry touts economic studies finding that many beer drinkers will switch, rather than pay more.

Schaier noted: "We're in a daily sort of razor's edge competition with Massachusetts on beer pricing."

Massachusetts abandoned an experiment with a 6.125 percent sales tax on beer a couple of years ago.

The gubernatorial commission has not taken a formal position on the bill, but Rourke said members have long been seeking more money for drug and alcohol prevention work.

"The beer tax hasn't been adjusted in the neighborhood of going on 20 years," he said.

A fiscal note attached to the bill says the State Liquor Commission estimates that three new jobs will be created to oversee the new substance abuse programs, at an annual cost for salaries, benefits and expenses of more than $230,000.

The legislation is currently before the House Ways and Means Committee.

Weed calls himself a realist about the prospects for the increase in the beer tax.

"My experience is that there are usually many more lobbyists than committee members," Weed said. "Whenever I have offered a tax in the past, I have a bunch of people paid to discourage careful and deliberate thinking."